Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240714

President trump hinted negotiations with china might be called off. In hongeek of protests kong as business increasingly takes a hit. Get started with a quick check of the markets. U. S. Closed friday, stocks sagged on escalating trade tension. S p 500 down 7 10 of 1 . Falls afterng about the yuan devaluation. Losses were led by tech and energy stocks. Point the s p 500 falling 1. 3 after President Trump said next months talks could get canceled. Were paredse losses back after white house officials those back some of concerns. Semiconductors took some of the biggest hits. U. S. Futures unchanged at the moment. We will see how we are setting up for the market open in asia. Futures are pointing to a mixed reaction in asia. Friday thaty on trade talks could be called off. Is getting ready to release that list of chinese products to be slapped with 10 tariffs. Showing someoul weakness. We will be watching for to have his meeting with advisors. South korea and the philippines said to have talks on free bilateral trade agreements. Switching boards, trading may be limited in the asiapacific region with major markets closed ,oday for holidays in singapore malaysia, and japan. We will be watching for announcements from west china cement among others. The lets check in on first word news with su keenan in new york. Su we start with two of chinas most experienced central bankers warning of a prolonged currency war. Commissioner says the conflict could expand and the yuan needed a more global role to deal with the challenges. Theer Deputy Governor said trade war is evolving into a currency war and policymakers must prepare for a long battle. Kashmirarts of remains closed off ahead of seasonal celebrations with phone lines in the internet cut off. Leading political figures are in detention. Theme minister pakistani leader has warned genocide. Former head of the u. K. Lord chris lake says that if the u. K. Crashes out of the European Union at the end of october without a deal, the pound could reasonably be expected to fall further. Prime minister Boris Johnson says the u. K. Will leave the eu in october with or without a deal. To north korea now, the country has released pictures of a missile test just hours after President Trump said that kim jongun was willing to meet again for nuclear negotiation. North koreas media said the erentles have a diffi tactical ability. Pyongyang said it would hold all other dialogue with washington directly. At least 32 people have been killed and 16 more are missing after a typhoon swept through chinas eastern coastal province. Damages put it over 2 billion. The tycoon made landfall Early Saturday Morning and moves of the coast. Global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 in 120ists and analysts countries, im su keenan, this is bloomberg. Shery the trump is due to release the list of remaining chinese exports it plans to hit with new tariffs. It is expected to be the newest catalyst in ongoing trade war. Expected to hit closer to home for american, consumer goods could be on the list. Definitely, we have seen estimates that really for every american household, these tariffs could represent a few hundred dollars a year. Hit to thes a big consumer pocketbook. Electronics,ing iphones, laptops, and other consumer goods, the things you might be buying out walmart or from amazon will all be hit. Nyere wont be too ma exceptions. Maybe because the u. S. Sees this as the best way to get china back to the negotiating table. Shery the imf has come out with its annual report on china saying if a trade agreement is not reached, it could hurt chinas longterm growth. What are we expecting in terms of chinas ambitions here . A very interesting report and plays into what President Trump has been saying. Looking for somewhere else to make a good in some cases. It really seems like this pressure from the u. S. Is a huge roadblock to chinas hopes for some pretty serious reform over the next several years. We have spoken repeatedly over the past few months, it seems some stuff from President Trumps advisors that this is a battle for supremacy over the longterm. It is not about tariffs. It is about who will be the economic superpower in decades to come. From bothard rattling sides about maybe we wont have the talks that we plan to hold in september. This is getting to be quite a prolonged situation with no end in sight. Caveat, we certainly think President Trump wants to have a trade deal at some point. We would like it for his reelection cycle. If the comprehensive deal was reached it would probably market. Stock certainly not a positive for china at the moment. The relationship is a on so many fronts. Former secretary treasury Larry Summers commenting on this. We are probably at the riskiest moment that we have been in since the financial crisis. Some of that has to do with how long the recovery is going on and the inevitable buildup of imbalances. A great deal has to do with the uncertainty and risks created by a rather foolish trade concept. That is the Larry Summers perspective, how does that fit in . Certainly people within the Trump Administration who may be somewhat on the same page because there are some trade talks, possibly Steven Mnuchin fromthers do see dangers the trade war. The prevailing view is really more hawkish. You have peter navarro, robert lighthizer, the trade representative driving the bus. Summers certainly didnt mince words. He talked about reduced job creation and higher prices for consumers. There are people within the white house listening, they may see that as a bit of a cautionary tale. Larry summers did work for president barack obama. That isst not a view probably at the forefront of the white house at the moment. Paul bloomberg editor ross hong kong at the moment. It is the 10th straight weekend of antichina demonstration. They fired tear gas and rubber bullets to clear subway stations. Our chief north asia correspondent Stephen Engle is outside the police headquarters. Another pretty wild weekend . Stephen you can start giving a counter how many times i say tense calm. Tense calm10t after a 10th weekend in a row of unrest which seems to be neithering as side is backing down. People looking at local media video of the protest and the crackdown by police. We went and got some coffee around the corner. The growth a copy shop was quick to bring out her phone and show the video she shot of Police Tear Gas in fired right around the corner from here yesterday afternoon. Several different districts. That is a tactic that has evolved. They pop up in a certain place as they avoid arrest. Protest going and keep the police on edge a little bit. There been a number of different seen tearre we have gas being fired for the first time into a subway station. Teargas was fired at the entrance of the subway station. The police grabbing him and pulling him back into the street using batons and arresting them. Neither side is backing down. They are not just the aggressors. They are the victims as well. One Police Officer was treated for some burns on his legs. Shery have we heard from the Hong Kong Government, from carrie lam that there have been some concessions for the protesters . No concessions and no backing down on the five main demands that they are asking for. It was interesting. While the unrest was on the at ats, carrie lam was Training Facility for University Students speaking in mandarin talking about the need to connect with young people. Sure who is advising carrie lam at this time. If she will connect with young people it will not be speaking mandarin at a Peoples Liberation army ceremony. The people who are fighting for their future are on the streets. Mind, that is not the majority of the protesters. They have been at the airport most of the weekend. Peaceful sit in protest appealing their message to an international arriving passengers. Started to wind down yesterday. We are hearing because there is , one of a young female protester that was hit in the eye with a rubber bullet. That was another call perhaps the peaceful sit in at the airport in her honor should continue. I have to be cautious about how much of this i actually say until we could substantiate it. Neither side is giving in. Shery we will continue to watch the development. Our chief north asia correspondent from hong kong. Washington is urging to help use tensions. We will hear from the pakistani ambassador to the u. S. Paul we are expecting more Economic Data from across asia including chinas Industrial Production numbers. For preview. Ined this is bloomberg. Asia. This is daybreak five after last weeks centralbank decisions in the asiapacific, the economic calendars have been quieter. We have the midweek and chinas did week data dump. On thursday here in australia we have the jobs numbers and there will be jobs numbers out of indonesia as well. Guest putned by our it all into context. Lets start with china. This week Industrial Production and retail sales, all of these numbers coming in july. Are you expecting they will not be too bad over what someone rest . Katrina we are expecting to see brought stabilization. We are not expecting a rebound in the credit data. It will just be continual ongoing softness. It is and of the day measured stimulus. Not trying to go gung ho. Trying to keep the ship steady. They arere is a sense keeping it out to dry, for what . Escalation of the trade war . Katrina that is a good point. They are keeping their eye on the fact that they want to balance their economy. They want to get a hand on those Financial Risks that they are carrying. Leverage thent to economy further. That is an important consideration. More yet we are seeing fiscal policies coming from the government including tax cuts. How will they balance the economy . Katrina that is what they will continue to do over the next couple of months and next year really. Releasing fiscal measures and monetary measures. Trying to get the balance right to keep a balanced and steady of theth the backdrop trade war that is really hurting Economic Sentiment in china as well as trying to keep their eye on creating sustainable growth. Shery aside from the rba, all banks in central asia cutting rates. What is the risk of policymakers of talking themselves into a recession . Katrina that is a very good point and a concern for us at the moment. We are at a point where it could be that we do talk ourselves into recession. The trade war has smothered animal spirit throughout asia. Ratesl banks were cutting and they were concerned about the impact the trade war is having on not just the export and manufacturing data but the Economic Outlook going forward. You do start to talk yourself into darker times. Has risen recession in the trade war has gone back to escalation stage. Paul consecutive quarters with negative growth. We seem to be some distance off that. Take a look at malaysia. 1. 5 expected there, what are you looking at . Katrina malaysia is a bit of a bright spot. Think it will hover around a steady 4. 5 . Tot is a star contrast places like singapore. We are expecting to see continued and significant week this in the economy in the june quarter. In australia we got jobs numbers thursday. They move the goal post a little bit in terms of what it considers full employment. 4. 5 i think they are looking for. Is more easing baked in . Katrina we are definitely expecting that. Looking at 25 basis points in october. The path in 2020 is really uncertain in australia. I think it will be driven by how aggressively the central bank in addition to more fiscal policy will be able to reintegrate domestic demand which has really hit a soft spot. Shery we have the 50 basis point cut from the rbn last week. Given that much of the Residential Mortgages are already fixed, i wonder how long it takes for itself in the economy. Have other Asian Central banks done this as well . Katrina that is a good point with regards to new zealand. I think it is Something Like 80 of mortgages in new zealand are fixed rate. What is more important for new zealand i would say is the Exchange Rate affect. The 50 basis point cut. That really jolted it. That is a good thing for the exports. Economy, thepen Exchange Rate channel is an important mechanism. It transmits through the economy. More broadly in asia what the Central Banks are trying to do is weaken currency as well. The export engines are already quite weak. That weakening the Exchange Rate could be more aggressively than expected. That helps the currency weaken. Shery we will see how President Trump actually reacts to all of that given that many of the economies are on the watchlist. Thank you so much for joining us. Plenty more to come on daybreak asia. This is bloomberg. Shery this is daybreak asia. Quick check of a the latest business flash headlines. Lossairways secondquarter doubled in the Second Quarter slowdown. A shortfall of 223 million compared to a loss of 100 million earlier in the year. It is dealing with falling towards numbers and a struggling d appreciation against the u. S. Dollar. Have a list of investors although no names have been named. Reports say there are no interest yet. They will evaluate the bids and come up with a shortlist in the coming days. Shery up next, chinese policymakers are holding back on monetary stimulus, keeping their options open as the standoff threatens to morph into a currency war. This is bloomberg. Su this is daybreak asia. Me andt with the u. S. To the former u. S. Treasury secretary larry said love Larry Summers. He says the u. S. And global economies are at the riskiest moment since the financial crisis. He told cnn the slowdown has worsened and President Trumps trade war. He added the u. S. Is losing out in terms of uncertainty, reduced investment, and lower job creation and it is all for the sake of benefits that are unlikely to be of substantial magnitude. We are probably at the riskiest moment in terms of recurrence of recession that we have been in since the financial crisis. Some of that has to do with how long the recovery is going on, the inevitable buildup of and balances, but a great deal has to do with the uncertainty and risks created by what i think is a rather sadomasochistic and foolish trade conflict. Su to the latest violence in hong kong, demonstrators clashed with Police Across hong kong sunday night in some of the most violent scenes since protests began 10 weeks ago. Demonstrators held projectiles while police fired tear grass teargas at several locations. They were filmed beating protesters or the clashes follow three days of events that began at the airport on friday. Most protesters had been denied police permits. Verse archie has lost its Brand Ambassador in china after one of its tshirts sparked a wave of online controversy. Chose both hong kong and the cow as independent nations rather than special Administrative Region regions with china. There saatchi said it is deeply sorry and resolutely respects chinas sovereignty but that was not enough to stop bankers stopping a link to the label. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im su keenan. This is bloomberg. Chose both hong kong we are a halfhour away from the open in sydney. Lets turn to selena. What are you watching . For a slate ofing korea stock movers that could move significantly when the markets open. Korea gas reported operating profit for the Second Quarter that be the highest analyst estimate coming in at 204 point 7 billion juan versus the estimate of 121. 3 8 billion yuan. Hasung is reporting that it begun sourcing extreme ultraviolet photoresist that the compound used in the chipmaking process. It is sourcing that from a belgian company. Samsung was telling nikkei this in terms of explaining how it is diversifying its suppliers to deal with the japanese export restrictions. Down k korea was colmar korea was down. Videowas a youtube criticizing the governments response to japans export curbs to employees during a monthly meeting. Rush to haven assets continued. Looking at the japanese yen strengthening against the dollar, extending move seen at the end of lax week when trump said the tran the plan to trade talks could be called off entirely. It is reaching ever closer to that 105 level. Looking at another currency. The aussie dollar is becoming vulnerable with signs that the trade war could morph into a currency role currency war. Poor job data that we are expecting this week could tip the balance in favor of another rate cut by the reserve bank of australia which could push the aussie dollar toward that important level of. 65 u. S. Cents versus the greenback. Paul thank you. Lets get more on what we should be watching as trading gets underway in asia and global markets. Adam haigh is with us. Last week was very volatile. Trade tensions are ratcheting up again. His volatility going to return this week . Adam i think more people will be hoping it does not. It is unusual that we see such heightened volatility especially in the bond market. We saw in treasury moves, intraday even between 10 and 15 basis points on the benchmark 10 year yield. That is huge and very unlikely for that to continue for a second week. With a trade war, the real focus is putting markets around of the moment, it seems like there is little else to move the dial. Not a huge amount on the data point. Equity bulls continue to come back to what you see in the screen, and that is the earnings yield and the potential for upside equities. The earning yields looks continues to look decent relative to bonds as we have seen this massive bond rally, we have seen depression and yields globally. That is really what the equity side of the Global Investor base keep coming back to. It is a very difficult world to find yield at the moment with the trade war very much in flux. It is pushing people to incrementally want to take a little bit more risk at the margin. Clearly, people have got overall cautious settings. With an absence of fed speakers not on the watch until we get to that symposium at jackson hole, the fed cuts 50 basis points or so by the end of the year, pretty well priced by the market. It will be the trade war that will put around this week i would have thought. Shery we continue to see the yield curves flattening. What does this say about how policymakers can get us out of the slowdown . I think what it tells us really is that the market is very cautious about the ability of Central Banks to be able to resuscitate growth during this very tricky period for the Global Economy. Also, on the inflation side, to kick on and provide some meaningful inflation that will get inflation around the world back or closer to centralbank targets. As this chart shows in your gtv library, that flattening of the yield curve, especially in the mediumterm, shows you that the markets are very uncertain about whether policymakers can do enough to get this growth slowdown reignited. I think that is really what is informing overall global asset allocators perspective to take a little bit less risk at this point. Some people still want to move a little bit more money into equities given yield is hard to come by and other places of the world. But it is clearly a very tricky set up with a lot of people forming the conclusion that prior to the president ial election in 2020, the likelihood of a deal or some kind of compromise on the trade war looks harder and harder to come by at this point. Shery adam haigh, thank you so much, bloomberg o. A. T. Global market editor. You can find his charts on the gtv go library on the bloomberg. Officials at the peoples bank of china warning that the trade war with the u. S. Is deepening. That is as policymakers are holding back from rolling out the victims of monetary stimulus. Our chief asia economics correspondent emma curran joins us from on from hong kong. We have not seen any key rate cuts in china as of yet. We have seen triple our cats and other lending facilities being tweaked. Froms the message officials what is the message from officials . We two streams of thoughts from former officials. And of course current pboc officials. We have these gathering of former retired officials warning china should dig deep and prepare for a long front when it comes to the trade war with the u. S. In the pbocs own Monetary Policy board, they are talking about a need to stay rational when you look at the risks facing the economy. That feeds the idea that china has been extending to the world that the economy is slowing but they are rolling out relatively disciplined stimulus by their own standards for a nuanced. The central bank is playing a role in terms of trying to get credit cheaper. The big take away from watchers is the pboc is saying, at what point will that stance need to change . If the economy starts to slow, how much further, when will that prompt the pboc to come off the sidelines and a big way and how will it do so . We have had figures recently showing total debt is up around 300 of gdp level. That will be a key constraint and how policymakers respond. That is why everyone is watching at what point the pboc decides we have to come in and a big way. Shery in the imf, they release their annual report on china. What did it say . Enda i think one of the Key Takeaways from that was they are regulating back to the trade war. They were making the point that if the u. S. Threat of 10 tariffs heads toward 25 tariffs on chinese goods, you are potentially looking at 0. 8 Percentage Points from taking off chinas economy. That is a hit for chinas economy. This is something of significance for the world. It is the worlds biggest economy, the biggest trading nation, the biggest generator of Global Economic growth. I think the fear would be that if china does start to feel pains in the trade war as the year goes on and into next year, the imf is saying be prepared for global spillovers. That will not just be regional trading partners. That will be the World Economy, europe, and the u. S. Also. Paul we had some reasonably disappointing pbi and cpi numbers for july. That predated the escalation of the trade war. Industrial production resales are up this week. What can we expect . Enda you are right. We had that contraction in pbi for the first time in almost three years during july. I think we had toptier to numbers this week that all of the expectations are that it will confirm the economy is slowing. We will have credit numbers, retail sales. If they suggest the economy slows, something of a manageable pace and manageable decline, then there is no real threat to growth target range between 6 and 6. 5 . But is probably ok for policymakers. They are not looking for blockbuster headlines. If we saw a big slump on these numbers, and i would say keep an eye on retail sales because Consumer Confidence has been holding up somewhat in china. There are signs of weaknesses. You only have to look at the historic slump in the car market. If we see weakness there, that may indicate that consumers are starting to get worn down by the concerns over the trade war, over the slowing World Economy, and over the constraints on the domestic economy. They will be a big read for where chinas economy is headed. It gives a good sense as to how pronounced the slowdown is as we head into the back half of this year. Paul alright. Chief asia economics correspondent enda curran, thank you for joining us. The ongoing trade war continues to keep commodity investors on edge. Commodities reporter david stringer joins us now from melbourne. Raw materials have been roiled by the deepening trade tensions. We were just discussing with enda the numbers that will be out of china. We have seen iron or cratering over the past week or so. What can we expect . Thats right. It has been a tough time for most raw materials. It is really a q. Week. Plenty of data emma events, and filings coming this week. All of which will give us a better insight into the impact of those u. S. China trade tensions and certainly give us something of a better handle on the outlook for raw materials. Was discussing, there will be data on retail sales, credit, all of that will give commodity investors a bit of a bettering site into the pace of slowdown in china. Worlds biggest commodities consumer, we also have as you mention the industrial output data later in the week. That will give us a read on markets like steel or a la minium or aluminum and crude oil. Key data coming out of china. In agriculture, we will have earnings reports from asias biggest producers. We will also here in australia, earnings from eucharist mining, the biggest gold producer in the country. People will be watching in the oil markets later today and we have that firstever Earnings Call from saudi arabia stateowned oil company, saudi aramco, im sure people will be looking for clarity. They be more detail on how things have been progressing with their plans for a 2020 ipo. Shery we will also here in aust, earnings seeing gold rallying on the safe haven demand. We arenot to mention the fed e. This gtv chart showing the december contract is now above 1500. How are investors positioning in this environment . Has the rally gone too far . It is interesting, i guess you might be expecting a little note of caution. We are not seeing that yet. Banks like Goldman Sachs and citigroup, both see potential for further gains. Both of them calling for gold at the 1600 dollar level within six months. Certainly we are seeing investors who agree. Data out of the u. S. On friday showed hedge funds raised their long wages on gold by about a quarter, the highest level since 2016. Investors are buying into that potential for further gains. I spent a lot of last week with a whole number of gold producers at the conference in australia. They are equally bullish. They say it is not just about trade tensions. Onn if there is a deal trade, they still see that low Interest Rate environment as being incredibly positive. They see that as may be the main driver of longerterm, whatever happens with the geopolitics. Shery david stringer, thank you so much for that, Senior Editor and commodities reporter. Coming up, the u. S. Is being urged to intervene as large parts of indian cashmere remain cut off from the wider world. We will hear from pakistans ambassador to the u. S. Next. This is bloomberg. Paul large parts of Indian Kashmir remain cut off from the rest of the country and the outside world for any the day with a ban on public gatherings keeping most people indoors. Pakistans ambassador to the u. S. Says the regions autonomy is a serious escalation in the decades long crossborder dispute. Asad majeed khan spoke to bloomberg from washington. Dr. Khan what india has done is unilaterally change these the status of the territory which is recognized by the entire international community, including the United Nations and the disputed territory. We are the party to the dispute and have a very serious issue with how india has done it. I think one consequence of this entire region the is under a lockdown. Taken itshas actually presence also in kashmir, turning the whole valley into perhaps the largest prison in the world. With about 12 Million People being seen and washed by 9000 troops. This is a serious escalation right in our neighborhood, which we are very concerned about. How serious could it become . Many feel it will be going through diplomatic communication. There any risk that we could see a breach to your crucial bilateral nonnuclear aggression agreement . Amb. Khan pakistan has, and i has seen aorld responsibility, even during the crisis if you recall. India violated our has seen a sovereignty and sent in their aircrafts to bomb on us, even in the face of that kind of aggression, our aggression, our response was dictated by restraint. The Prime Minister was here on a visit in the United States. He has consistently spoke about pakistans desire for peace. I think we remain committed to that. Essentially, i think what is really important is that this escalation that we have seen on indias side needs to be deescalated for the two countries to actually engage in a dialogue. Departmente state has not addressed the legality of this move yet. I wonder what kind of conversations you have had with u. S. Officials . What would you like to see from the u. S. In terms of her sounding to the decision . Of responding to the decision . Amb. Khan this is something the state Department Spokesperson clearly said, that there is no shift or chain in the u. S. Position which is to seek it as a dispute and as a disputed territory. In fact, when the Prime Minister trump, topresident offer mediation in resolving this long outstanding dispute by itself, it was a recognition of the existence of a dispute that needs a resolution. Welcome thewe president s desire to do so. India did not accept that offer. For us, i think the United States continued engagement and the u. S. As a preeminent power of the world, i think it has an Important Role to play. Addressing trying to have two countries, have a dialogue to resolve the issue, to undo to urge india things that they have done over the last one week in unleashing them at the pressure, and arresting people across the board, in turning the valley into a huge prison. Shery that was Asad Majeed Khan , pakistans ambassador to the u. S. Our interactive tv function, tv , you can watch it live and catch up on past interviews as well as dive into any of the securities are bloomberg functions we talk about. They come part of the conversation by sending as messages during our shows. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Is daybreak asia. Im paul allen in sydney. Shery im shery ahn in new york. Markets open in sydney. At the top of the hour, tokyo off on public holiday. Lets turn to selena for what to watch in the markets. Thats right. Japan, singapore, thailand, the philippines, and japan, markets are closed. Features are pointed to mild losses at the open. You can see the kospi and sydney down more than 1 10 of 1 and more than 5 10 of 1 . When the markets open shortly, we will see how they continue to digest reports that the u. S. Is putting together the list of goods that will be slapped with the next round of tariffs. We heard ahead of the weekend that Chinese Foreign central bankers are warning that the confrontation with the u. S. Is deepening and calling for a rational view of the current headwinds. Switching the board, taking a look at the end that has been strengthening on the backs of this rush to haven assets amid the escalating trade war. As you can see, from the chart, it shows the usc jpy pair has been at freaky levels. That pair is at risk of falling to a 2019 low. Aul thank, selina lets get a check of the latest business flash headlines. Ams is offering more than 4 billion for oz ramp and a second attempt by the company to acquire its struggling german rival. The offer is worth 38 euros a share and is higher than the 35 euros from Carlyle Group that has already been accepted. They became a takeover target after a series of profit warnings. In the public spat was a former appearance. Shery frontera says it sees a loss in 2019 and will not be paying a dividend. Expects to make a thanted shortfall of more 400 million u. S. Dollars because of writedowns on the number of assets it considers are overvalued. The charges are related to specific items than 400 million u. S. Dollars because and dive investments they have made this year the numbers need to be finalized and audited. Paul forward is preparing to build a china operation center. It is part of a plan to revamp and sharpen its Chinese Business and launch more than 30 new vehicles tailored to chinese tastes. It and has attracted a large nur of Car Manufacturers and auto parts enterprises, and built a new industrial chain that covers manufacturing, sales, and logistics. Shery blackrocks private equity fund has struck its first deal spending 807 5 million to become the largest shareholder in a u. S. Brand management company. Authentic brands group manages 50 clothing and entertainment labels including sports illustrated, nine west, and juicy couture. The deal values the brand at more than 4 billion including debt. Paul coming up on the next hour of daybreak asia. A quiet start to the week with several markets closed in the region. Could the pause help relieve some of the market volatility . We will hear from ig groups kyle rotter. This is bloomberg. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Paul im paul allen in sydney. Asias major markets are about to open for trade. Shery good evening from bloombergs Global Headquarters in new york, im shery ahn. Selina im selina wang in beijing. Welcome to daybreak asia. Paul our top stories this monday, global warning. Larry summers says the World Economy is facing its worst threats in a decade and the trade war is simply foolish. Havens are back in fashion. The yen edges higher after President Trump hinted negotiations with china may be called off. Shery hong kong protests enter a 10th week. Business is increasingly taking a hit amid new warnings about the economy. We are getting the latest numbers out of south korea. For the first 10 days of august, we are seeing exports falling 22. 1 from a year ago. This is for the first 10 days of august. Imports falling 13. 2 from a year ago. When it comes to chip exports, the Semiconductor Industry has been badly hit. Down 34. 2 year on year for the first 10 days of august. We have seen the july export numbers falling for an eighth consecutive month, down 11 . It seems that for the month of august, we could see another decline if this trend continues. We have at the korean and australian markets coming online. This says japan is away on public holiday. Lets turn to selina for a check of the market action. Selina despite some of that dismal news and data you were just talking about as well as reports of the trade war escalating, we are seeing the kospi open up almost 2 10 of 1 . We will also be watching in korea for a president moon jaeins meeting with senior advisors. South korea and the philippines are set to hold the third round of talks on bilateral free trade. South korea said there is a high chance of more missile launches coming from north korea. Switching boards and looking at the asx, and nzx, they are both showing little signs of weakness. New zealand down almost 2 10 of 1 . Asx, little change their. The bit of weakness as well on the Australian Dollar on the sides that the global trade war is morphing into a currency race. We will watch out for australias job data this week. If it comes out worse than expected, could push the aussie dollar toward the psychological level of. 65. Switching boards again for stocks that im watching, Crown Resorts trading. This is after this data gaining regulator said it will investigate claims that organize crime gains and laundry money at the companies casinos, also looking at korea gas core up more than 1 . That is after positive earnings. Samsung moving up more than 1. 5 . That is after the company told the nikkei it is die serve diversifying its suppliers to deal with japanese export restrictions. Kolmar continues the fall after falling to a fouryear low, down more than 3 after reports that the companys chairman showed Youtube Video criticizing president moon jaeins governments response to demand to jim at two japans export meetings. Paul all right, thank you. Lets check in on first word news with su keenan in new york. Su we start with the latest and hong kong. Demonstrators clashed with Police Across hong kong sunday night in some of the most violent scenes since protests began 10 weeks ago. Demonstrators hurled projectiles, including bombs. While police fired tear gas at several locations including inside a subway station. There were they were filmed beating protesters or the clashes follow three days of protests that began at the airport on fridays most protest which have been denied police permits. Verse watch a has lost its Brand Ambassador in china. This after one of its tshirts sparked a wave of online controversy. The design lists cities and their respective countries and shows both hong kong and macau as independent nations rather than special Administrative Regions of china. Deeply sorryt is and respects chinas sovereignty but that was not enough to act to stop and actors linked to the label. The former head of the u. K. Simple service says sterling coulds faulty parity with the dollar in the event of a no deal brexit. She says that if the u. K. Crashes out of the European Union at the end of october without a deal, the pound could reasonably be expected to tumble even further. Prime minister Boris Johnson has repeatedly said the u. K. Will leave the eu and october with or without a deal. Hash korea, the country released pictures of a missile test hours after President Trump that said kim jongun was willing to meet again for nuclear negotiations. North korea state media has said the missiles are tactically different than earlier ones. Pyongyang also criticized south korea for continuing to host military drills with the u. S. And said it would hold all future dialogue on south korea with washington directly. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im su keenan. This is bloomberg. Shery former officials at the peoples bank of china warning that the trade war with the u. S. Is deepening. That is as policymakers are holding back from rolling out the big guns of monetary stimulus. Our chief asia economics curran joins enda us. What was the message from officials . Listening to the commentary, the message was that china had to dig deep or something of a longhaul when it comes to this trade dispute with the u. S. There is a realization that it will be protracted. There is not any kind of a nearterm solution insight. That will impact the Exchange Rate. We have a former pbc governor making the point that china should step up its efforts to make the you one more global. That has been a long Time Favorite theme of his. It is interesting that a disliking at the opportunity for the yuan to go further global globally in terms of its usage around the world. Thatentral message was expectations are diminished. We have not really heard any signals one way or another from china, whether or not these trade talks that were planned in september would still go ahead, where the trade war goes next. That will dictate the Economic Outlook and policy for china. Also a warningaw on chinas economy. What was the theme of that . Enda the essential message from that was again, it goes back to the trade war. They were making the point that if you see those tariffs on chinese goods go up toward 25 , then you are potentially talking asia percentages. That is not the china story. That is a spillover effect for the rest of the world. That is what the imf is saying. It will impact regional trading partners. It will impact the Global Economy. It is the worlds biggest source of Economic Growth. If these tariffs start to hurt chinas economy, and so far we see evidence any impact, it has been somewhat manageable. If that starts to deteriorate further, it will become much more of a u. S. China trade war story. Will not paul paul become a global issue chief asia economics correspondent, enda curran thank you very much. Still to come, currency wars front and center again on the fourth anniversary of the one. More on what traders should expect in a minute. Shery up next, the unrest in hong kong takes another step. We will recap another weekend of protest and ask, where do things go now . This is bloomberg. Shery this is daybreak asia. Im shery ahn in new york. Paul im paul allen in sydney. Hong kong police have battled protesters in several districts across the city on the 10th straight weekend of antichina demonstrations. They fired tear gas and rubber bullets to clear streets and subway stations, while some protesters threw bricks and a petrol bomb. Chief nor the Asian Correspondent Stephen Engle is outside headquarters. There does not seem to be showing any sides signs of abating, does it . Was the 10th straight weekend of unrest on the streets of hong kong. This monday morning, people are waking up wondering how their morning commute is going to go . So far, pretty smooth from what i can see. Last night, battles being held across the city in many different districts. It seems as though the police have are hitting harder, the harder they hit, the protesters say the tougher their resolve becomes. Yesterday, and over the weekend, there was really only one official protest approved by the police at victoria park. But then the protesters are saying at least that we will not be announcing where we are going to be protesting because that is not necessarily working. They are having the flash mob approach where they will have protests pop up in various places and then move on. One thing we do know at least on a much on one message group, protests will be held here tonight starting at 7 30 tonight in front of the police headquarters. They will be protesting the use of force and the level of force being used by police which sought tear gas being fired on the streets, including around the corner from here in front of a coffee shop we got our morning joe from this morning. Thelso had teargas for first time being fired directly inside subway stations. Also reports that happened in tycoon to the east of us. It is getting more violent. Both sides are getting firmer in their resolve. And there is no resolution on the table. Shery we saw Second Quarter gdp numbers out of hong kong deeply undershooting expectations. What is the Hong Kong Government saying about this . Seems as though that is a fairly new strategy from the government as we have seen carrie lam a couple times address the public after she went really quiet for a couple of weeks. With paul chan, the financial secretary, standing by her side, they were appealing over the heads of what they call a small minority of violent protesters. Appealing to the parents, the business community, saying we need to come together because the economy is definitely hurting. A Interesting Development on friday was the authorities in china giving a directive saying that any employee, be it pilot or flight attendants who have been found to be actively involved in the protest or supporting the protest are not going to be allowed to fly on mainland flights or even on flights that overfly mainland china. Keep in mind, 1 5 of flights are into the mainlands and more than half of the revenue, including hong kong and china is derived from hong kong and china. This is potentially a huge deal for the airlines including Cathay Pacific. Reporting the ceo put out a letter to the employees of Cathay Pacific saying china is key to our business that will be a very Interesting Development going forward. How hard will the Civil Aviation authority of china enforce this . Shery Stephen Engle, thank you so much. Our chief asia north correspondent from the streets of hong kong. Our next guest knows better the most challenges facing the hong kong police. Ceo of Corporate Risk consultancy. Thes also a former head of Royal Hong Kong Police criminal intelligence bureau. Great to have you with us. Thank you so much for your time. Do you see any chance of a resolution here between the protesters and the Hong Kong Government in beijing . Government isthe not inclined to negotiate at this point or to enter into discussions. I disagree slightly with your previous presenter in that i think the reason things went so violent last night is that the numbers are down, which makes demonstrators feel they need to be more active, more proactive, and more violent. What happened yesterday, there were movements around town, rail race stations railway stations. I think in the longer term, the movement the governments policy which i do not approve of, but the policy of sitting on their hands and hiding behind the police is actually working. The numbers are declining. The level of violence is increasing. As violence increases, the more middleclass people and ordinary people of hong kong will turn against this movement. Shery it will be interesting to see the evolution of these demonstrations into what steve was calling the flash mob protest. How effective have they been in continuing these demonstrations for a 10th week . Steve they are beginning, as i say, it is a strategy they need to attack. Because they cannot get the large numbers out into the streets anymore. I suppose from an images point of view, for the tv, it looks good. In reality, it is not working well. Im fearful for the democrats as a consequence of this. There are many people now who will beginning to wonder whether the democrats in these hard and these hardcore students are aligned or not. I fear for the next election. We are all hoping for a political solution to this soon. But as i say, the numbers are working against them. The violence will increase. In the response and the response and impact on the local people will be such that this will eventually run out of steam. Paul you are a former head of the Hong Kong Central intelligence bureau. What is your thought on the pit the Police Tactics . We have accusations of brutality, the protesters will push back harder with brutal tactics, and on the other hand we have scenes from a few weeks ago of Police Failing to defend the legislature. What is your take on the Police Tactics . Head of the Royal Hong Kong Police, not the current hong kong police. I wouldimpartial view, say most of the time, the police have behaved with extreme discipline. Facing a particularly difficult situation. This is a political situation, not one that should be resolved by the police on the streets. The absence of anybody from the government talking to people has put the police in the middle. There has been the audience, which have not gone well. I think there is nobody perfect in the situation. The increasing level of violence and desperation shown has actually resulted in a moderated response. Last nights pictures are pretty ugly this morning, the city is functioning as if nothing had happened. The stock exchanges open, everyone has gone back to work. It is easy to see these pictures and to form a wrong impression of what is going on here. Paul later this month, you will give a speech to the American Chamber of commerce in hong kong. What is your advice to businesses trying to whether all of this . Whole businesses need a series of things. There is a basic advice, basic security stuff related to your staff and access to the premise, which is simple but important. Then there are issues of not getting your company or corporation involved so you will become identified as he mentioned to Cathay Pacific so you do not get identified as representing one side or the other. A number of the big mall managers and hong kong are panicked at various times and newspaper ads saying we will not let the police in if they are chasing demonstrators. This sort ofwe will not let thef they are chasing demonstrators. This sort of thing is really shooting from the hip, may badly pr people. There are a lot of things people need to consider. Number one, protector people. Your access to your premises. Your core business. And then the political side of this is worth a good watch. Not being aligned to either side during the course of this is quite important from a corporate point of view. Shery how long are you expecting beijing to tolerate such open dissent . When you advise your clients, do you advise them that we could potentially see more violence in the coming weeks, or that these protests will potentially fizzle out as they did back a few years ago during the Umbrella Movement . Steve this is a fundamentally different situation. The Umbrella Movement was apparently peaceful. This is the opposite. Whilst there may be a symbiotic relationship between the movement and the hardcore, which is apparent, this is a fundamentally different situation. I think longer term, the people of hong kong will become tired of this. Anddanger are agitators triad activity which are bubbling away on the surface. We saw elements of that last night. I think this will go on perhaps two further months. I do not think it will disturb International Business in a major way. Vickers, right, steve thank you very much for joining us. There is plenty more to come on daybreak asia. Stay with us. This is bloomberg. S bloomberg. Paul it looks as if we may be transitioning toward currency war. When people say china can weaponize women be, yes, they can. But they do not need to. A weaker renminbis starts to trigger something of a competitor competitive round of devaluations in asia for those countries that are linked to the china supply chain. We are the Inflection Point and deeper questions need to be asked as we go forward. Chinas rmb is facing more downward pressure. There is of course resistance from the u. S. That is almost parity. With President Trump at the helm, it is hard to rule out totally. It will be unlikely. If we see something, it will be a shock. Shery some of our guests on the possibility of a currency war. While President Trump has ruled out devaluing the dollar for now, and china moves to calm the markets, the prospects of a fullblown currency war remains. The correlation between the yuan and the emf x has never in higher. Willng the yuan fixing continue to be a key focus for investors. China shows the fourth anniversary of the stock any dell valuation of the bill you on. Bloomberg economics is the move allows the pboc to break of what economists call the impossible trinity on shackling Monetary Policy from the need to support the currency which it has done over much of the past four years. The new freedom may mean more easing and be sure to catch President Trumps attention. Paul thank you. To more on this, lets get our strategist in. It is all about the fixing. What are we expecting today . Good morning. It seems like every day at 9 15, we are in more and more laser focused on this fixing. 9 15 in singapore. I think we can look for more steady, gradual, you know, weakening of the yuan fixing. That seems to be what china did from last week. That seems to be their policy. I do not think there is much question that people agree that you want should weaken. We have these two former pboc officials talking about the possibility of a growing trade war. We have had the imf warning that further u. S. Tariffs could slow Economic Growth which is already slowing and it could slow it further. Whothere are some people say without the pboc in place, the yuan would be far weaker than it is now, probably closer to 7. 2 than seven. We can see this gradual weakening. Why were they only weaken it gradually . There are risks involved with a weakening a bigger devaluation. One of those risks if people take their money out of china. Another one as it would cause upheaval in the global markets. For the u. S. , President Trump has said he is not interested in devaluing the dollar. It looks like for that pair, the path is dollar up and yuan down. Shery and yet the u. S. Dollar has had incredible strength since the financial crisis. At more than 20 . The u. S. We expecting dollar to go once we see the fed easing and at the same time, other Central Banks around the world are doing the same thing . View, i am always looking to see where bond markets are going. U. S. Yields have fallen a lot in the past couple of weeks. The 10year delivers a yield of 174. That compares to japan which is 22. And to germany which is 58 basis points. In dollarf you invest assets, you are getting a positive yield compared to a negative yield in germany or japan. After all, the u. S. Economy is still doing pretty well. We are very long expansion, unemployment is quite low. Not only expect the dollar to benefit for the yield differential, but benefit as a haven. Japanese yen speculate if positions have turned positive. Quickly, how significant is this . The yen is one currency that will gain against the dollar. It seems to be the ultimate safe haven currency. People are talking about a continuing strengthening against the dollar. There is some talk about where that money has to go. It seems to be going into the bond markets. Shery wes goodman, thank you so much. This is bloomberg. This is daybreak asia. We start with two of chinas experience central bankers, warning of a prolonged currency war with the u. S. Them said the trade conflict would expand and the yuan needed a more global role to deal with the challenges of a dollardenominated. He said the trade war is evolving into a currency war and policymakers must prepare for a long battle. Says the u. S. And global economies are at their riskiest moments since the financial crisis. He told cnn the slowdown has worsened in President Trump trade war, which he called sadomasochistic and foolish. Losing oute u. S. Is on investments and job creation, all for the sake of benefit of unlikely a benefit to be substantial magnitude. Many people are killed a missing after a typhoon swept through china toward shanghai. More than a Million People were evacuated as the storm approached and damage is put at over 2 million. Saturdayandfall morning and is now a tropical storm. Are cutrts of kashmir off from the larger world for a today. Internetes and the remained cut off and leading political figures are in detention. Prime minister modi has promised a new era for the region while his pakistani counterpart has warned of genocide. Is takingputy premier his campaign to the beach after pulling the plug on a Practice Coalition government last week and calling for swift elections. The leader is touring the countrys coastline to drum up support as many italians had their for summer vacation. Head there for summer vacation. He wants to have a majority without allies, something that hasnt happened in 40 years. I dont think anyone has is scared of democracy. We are asking for elections. One should be scared if we are not asking for elections. We just want people to vote. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Paul thank you. Lets get a check of the markets with selena. Selena stocks in asia are kicking off a cautious note with no signs of the trade war letting appeared markets are shut in japan, malaysia, philippines, and thailand. The asx 200 down almost 3 10 of a percent, new zealand down was to tense up a percent. Kosby showing some weakness. The south korea benchmark is down almost 1 10 of a percent on the backs of data we got from korea, exports fell 22 from a year ago and chip exports fell more than 34 , also continuing to see followed from the japansouth korea trade spat. Switching to stock movers. 25 . Ng biologics up almost more than 7 ,down dropping the most in a few years and was downgraded at j. P. Morgan to neutral from overweight. Advancing after reports that net profit rose better than expected, with strong sales that offset some of the weakness in software areas. Rio tinto down more than 2 , added by following iron ore prices. Over the weekend, the ceo was defending the stock, calling it a cash machine. Paul thank you for that. Joining us from melbourne is kyle rotter. The past 20ry in minutes or so, Goldman Sachs saying it is raising concerns of a u. S. Recession inspired by the trade war and it is saying it doesnt see a resolution before the 2020 election. Is volatility just something markets will have to get used to now . Kyle absolutely. Interesting point, the vix is down. We are in a situation with markets, take stocks aside because they are getting juiced rates, butriskfree looking in the bond and commodity markets, we are on a precipice really, it suggests the slowdown in the Global Economy is coming quicker. We are now seeing repricing for an escalation in the trade war with expectation brought forward. The prospect is a Major Economic slowdown, and a serious one. Paul where do you position and a market like this . Kyle this is where you kind of this is where you see the kind of by everything attitude come into play. Stocks are still really looking like the only place to drive flow. But thats not being generated naturally by earnings outlooks, earnings are being downgraded. But markets are still getting a little excited by the prospect that there will be Interest Rate cuts across the board, when you start from the fed all the way down. It is a situation where we are in a momentum driven market, but we have upside capped at key levels. Above 3000. Has just you look at the situation where you have opportunities to buy, but opportunities are limited. Bond markets are attractive. Gold is still attractive. But youre looking for these things where momentum is throwing itself toward a particular direction and you are positioning yourself accordingly and respecting those trends. Thats what is happening now. If you want to go back to the stock market, i suppose losing that momentum to the upside, but really forced to buy in at certain situations because there are limited other places to go. Shery given the frustration we saw after the feds july rate cut, which was seen as a hawkish what is the risk Central Banks wont be able to cut enough . Kyle thats the biggest risk. If you look at things from a historical point of view, centralbank policy across the world is operating in an environment of diminishing returns. They have done so for 40 years. Now, the feduation still has a lot of ammunition. They can restimulate growth in the United States. But what the europeans have at their disposal and japan has at their disposal, and with the instability in the Chinese Markets, looking at what stimulus can be provided. There are large limitations. We see businesses are going to continue to invest and employ and do all of the things they are going to do in response to centralbank cuts, the way Central Banks want to because confidence is being hit greatly, or you see the end of cycle behavior accelerate. Thats what were looking at at the moment. As it stands, the fed will lead the way, they will cut aggressively and probably fall where markets want them to be. The concern is how far you can kick the can down the road and it would seem there is a finite ability to do that. Shery we have seen the dollar surge in recent months, adding to the tightness around the world. In much will the fed easing july and the potential cuts to come in the rest of the year help . Kyle the thing is, markets are so stubbornly buying into safe havens to hedge against a global slowdown wherever they can that it is quite marginal in terms of the overall activity dropping Financial Market behavior. I think the trump instability is having its own effect on that as well as cautious around the longterm prospects. At the end of the day, we are looking at a landscape with a global Monetary System being incredibly stretched in a way we havent seen since the 1970s with the because i system we system we have emerged. A lot of investors want alternatives to the u. S. Dollars but there is no system in place to have that achieved. If you look at other safe havens around the world, the pound is behaving like an aussie dollar or a kiwi currency. There is no safety. The euro has less safety as well. The japanese yen, if you want to buy that, thats one way to hedge. We are seeing people flee to gold. We are seeing that as a slow grind. Investors are looking for alternatives but trying to diversify across many alternatives because there is not one that stands out to hedge against the risk. Paul you mentioned the aussie dollar. There seems to be a long line of factors weighing on that, not just the strong greenback. Also centralbank policy here in australia. We have jobs numbers out on thursday that looks set to disappoint the rba benchmark. Kyle probably. An interesting thing that came out of the rba policy Statement Last week is the forecast of jobs rate is just shy of 5 . At 4. 5 righting now, reading behind the lines that between the lines, the rba reading between the lines, the rba things will be sufficiently strong to get the labor market or Unemployment Rate i should say, up to four and a half 4. 5 . At the very best, we will be lower these levels now for longer, and if not we are going to need to cut further. Markets have that take in, half a percent of the Interest Rate next year. If the Global Growth outlook continues to dim because of a number of fan theres a number of factors. Will have to introduce extraordinary monetary measures. What does it mean for the Australian Dollar . End of the day, it will be far more influenced in the shortterm by the u. S. Dollar, but quite simply if growth is in strong, is not an attractive proposition, and the numbers the rba is giving it are sluggish at best. It only reaffirms that view, i think. Paul most growth forecasts from the aria arvest on a based on the cash rate of 4. 5 . What are your hopes of seeing stimulus from the government . Kyle we are so lucky, as we always are, in this country that we managed to get a fortuitous left in terms of trade this year just by issue of the oil and iron ore price. Ship thatn a fiscal is more tied to them than other places in the world. Is politicalow expediency. Is the morrison government going to walk away from this surplus that it has touted . Will they hold onto to that and not stimulate adequately in response . The governor was scaling scathing on the government for not doing enough for now. Or where they or will they throw caution to the wind, break the commish, and break their promise and over stimulate . Its not enough to put the brakes on a major global slowdown. The rba doesnt know which way it will go in they are encouraging the government to take steps with tools we do have at our disposal. Shery given we are seeing a weaker chinese yuan, how will that affect the calculus and of the pboc when it comes to Monetary Policy and how will it affect the Chinese Market . Kyle i would say it is a game of playing with fire a little bit. There is probably i would suggest a bit of a shift in the chinese policymakers, more broadly speaking, trying to manage the trade war. You have seen the language move ofy from the promotion internationalism, trade liberalization, corporation across the globe, institutional is him and the sort of things, to being more about keeping face and assuring stability within their political sphere. You only have to look at what is happening in hong kong, but also other parts of china politically, it suggests policymakers are tarting starting to tighten the screws. I think what the policymakers are trying to do is control the theytion of the yuan so can fire some warning shots to the u. S. That we will no longer take this and we will be aggressive in our own way. We are going to try to offset the effect of tariffs you have imposed on us and we will devalue the yuan in such a way that eradicate the influence of that. The other thing, we will do this without interrupting a very unstable financial system. That will be incredibly important for the pboc, because now they will have to become much more vigilant about the way they stimulate the chinese economy, because it increases the risk of basically financial instability breaking out in their Financial Markets. There are a lot of push and pull factors. I think looking on a daytoday basis, could this lead effectively to an out of control you on yuan . It is up to your across and there is a major risk they get it wrong. Thank you so much for joining us. Coming up next, we head back to hong kong and talk to dbs economist a dbs economist about after they downgraded the forecast for the city. This is bloomberg. Mberg. We have seen an impact from the protests. Obviously they are significant in nature, and while the impact is not reflected in the results we just announced, you can expect we will feel it in the quarter we are currently in. The impact of the current situation, we are seeing that in booking, inbound bookings to hong kong. So relative to the same period last year. It is down. Global trade tensions and hong kong are having direct and indirect effects on a number of businesses. Majordont perceive any impact from hong kong profits. It is true the profits are continuing. It is hard to make any prediction about when it will last. Shery some Corporate Leaders talking about how the protests in hong kong are affecting businesses. Our next guest downgraded hong kongs gdp forecast this year to 0 . Now, great to have you with us. What you are seeing for the hong kong outlook is directly because of the protests since june, and how much is the broader slowdown in china and the rest of the world . Downgraded thee hong kong gdp forecast to 0 from 2. 5 is because of both the chinau. S. Trade war and the political instability in hong kong. The first half of the year, gdp growth had already slowed down. At 1. 6 in theth first and Second Quarter. We have to look at consumption, which had already slow down to already slow. S it is at a 10 year low. We see that the confidence on the hong kong economy from investors and is this is has weakened in the past few quarters. This is mainly because of the trade war. As you mentioned, all of the data is up through june, so it doesnt reflect the effect yet. Entering the second half of the year, we see the political instability and of course it will hurt retail sales in hong kong, which already are seeing a year on year decline. For the rest of the year, we believe the instability will continue to affect the recovery of hong kong. We have to mention china and the u. S. Are the top to bring export exporttions top two destinations of hong kong and they will be affected by the trade war. Thats why we downgraded the forecast. Shery to your point on consumption and retail sales, this chart on the bloomberg showing in the top panel help retail sales year on year have been declining since february. The second panel also showing jewelry and watches, sales of those items by value, which is showing Consumer Confidence, has been stalling as well. , youuch of this is also have the u. S. China trade war, and a depreciating chinese currency that really cuts into the purchasing power of mainland tourists coming to hong kong . Samuel thats right. What we have seen in the past few months is the chinese yen already depreciated. Have a continue to negative impact on jewelry and luxury goods. Of course, Consumer Confidence by politicalted instability and the trade war. The market is volatile since may. It is affecting Consumer Confidence and the domestic consumer. Mentioned theyou purchasing power of tourists is decline. Tourists themselves are declining as well. If we look at this other chart on the bloomberg terminal, we see a distinct downward trend toward the righthand side of the graph. Hitng way off from the big that was the sars crisis, but how long do you expect this to persist . Samuel of course, the economy situation and the spending is still relatively better than the sars level, for sure. Retail will see is continue to slow down because as we all know, businesses cannot operate as usual over the weekend. The protests are now on weekdays as well. Businesses will be disrupted. Iftuation cannot be the situation cannot be solved in the next couple of months, there will be a long conquer a long term impact on hong kong. Paul thank you very much for joining us this morning. Still more to come on daybreak asia. This is bloomberg. This is daybreak asia. Shery markets across asia looking make at the moment. Lets get a preview of what to watch in markets later this morning. Ahead of the hong kong and china open, we will be watching Cathay Pacific. This is after chinas aviation thatator issued a warning protesters will be suspended from duty on flights to mainland china. Im also watching China Everbright and China Literature earnings. They last closed up 3 10 of a percent and analysts say there could be strong growth sales because of intellectual property operations. Switching boards, look at this chart, the gap between the gap is widening. Anchoring the currency stronger with the fixing versus the onshore is rating appeared the market concern of the yen falling off a cliff is receding even though the seven level has been breached. It doesnt mean the yen will fall unchecked. Paul thank you very much. That is it from daybreak asia. Markets covering coverage continues. Markets for Bloomberg China open. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. I am tom mackenzie, welcome to Bloomberg Markets china open. I yvonne man. Tom lets get you top stories this monday morning. The trade war tensions ratchet even higher. The white house has a list of chinese goods that could face new tariffs. The yen edges higher as President Trump says negotiations may be called off. Tom violent clashes in hong kong as protests and businesses taking it hit about newar